Torrent Pharma to acquire Zyg Pharma

Ahmedabad-headquartered pharmaceutical major Torrent Pharmaceuticals has sealed a deal to acquire a 100% stake in Zyg Pharma Pvt Ltd, part of the Mumbai-based Encore Group, for an undisclosed sum.

Torrent Pharma acquires 100% stake in Zyg Pharma

Ahmedabad-headquartered pharmaceutical major Torrent Pharmaceuticals has sealed a deal to acquire a 100% stake in Zyg Pharma Pvt Ltd, part of the Mumbai-based Encore Group, for an undisclosed sum.

Zyg Pharma makes dermatological formulations including creams, ointments, gels, lotions, solutions, and is part of the Encore Group promoted by the Merchant family. The manufacturing site is located at Pithampur (Indore) and is approved by various regulatory authorities including USFDA, TGA Australia. The site includes capabilities for on site development, analytical method development and QC laboratory with separate areas for chemical instrumental and micro sections.

"In line with its strategy to diversify into new therapy segments, the acquisition will help Torrent to strengthen its position in the niche dermatological segment, especially in the developed markets like US and Europe," Torrent Pharma, which is valued at Rs 4,200 crore, said in a release.

According to market sources, the deal is estimated to be valued at around Rs 350-400 crore. Zyg has been a manufacturing partner to several international companies in India and has also built a successful international business through partners in developed as well as emerging markets.

Torrent said it would fund the acquisition through internal accruals. The transaction has been approved by the boards of both companies, and the transaction closure is subject to customary conditions and requisite regulatory and other approvals. The deal is expected to be closed by August 2015.

In January this year, Torrent had raised close to Rs 10,000 crore by issuing securities and had said that it is open to acquisitions to fuel its growth. At the time, the company told Business Standard that the funds would be used to refinance existing borrowings, as well as organic and inorganic growth. Torrent had acquired the domestic business of Elder Pharma in December 2013, a deal that gave Torrent access to new therapeutic areas in which it was looking to expand its presence.

Torrent Pharma is the flagship Company of the Torrent Group. Torrent has a fully equipped Research Center, employing almost 600 scientists, to support the company’s operations and product pipeline for both domestic and overseas markets. The company’s manufacturing plants located at Indrad, Baddi & Sikkim have facilities to produce Formulations and Bulk drugs. The plants are approved by authorities from various regulated and semi regulated markets like US, UK, Brazil, Germany, Australia and South Africa.

"The company has signed a share purchase agreement to acquire 100 per cent stake in Zyg Pharma Pvt Ltd, a company engaged in manufacturing various dermatological formulations like creams, ointments, gels, lotions and solutions," Torrent Pharmaceuticals said in a filing to the BSE.

Zyg Pharma, part of the Encore Group, is promoted by the Merchant family.

"Torrent will fund acquisition through internal accruals," the company said.

Torrent Pharmaceuticals said the acquisition will help it strengthen its position in niche dermatological segment, especially in developed markets like the US and Europe.

"The transaction has been approved by the Board of Directors of both the companies," it added.

Zyg Pharma, a part of the Merchant family-promoted Encore Group, makes dermatological formulations such as creams, ointments, gels, lotions and solutions. It has a manufacturing facility at Pithampur, Madhya Pradesh.

The buy will be in line with Torrent’s strategy to diversify into new therapy segments. It will strengthen its position in the niche dermatological products segment, especially in developed markets such as the US and Europe, the company said in a statement.

Torrent Pharma, the flagship company of the Torrent Group, has an annual turnover of Rs.4,200 crore and will fund the acquisition through internal accruals, the company said. The transaction closure, subject to customary closing conditions, requisite regulatory and other approvals, is expected by August.

Shares of Torrent Pharma gained 0.79% to close at Rs.1,183.40 on Tuesday, while the Sensex lost 0.18% to close at 27,440.14 points and the BSE Healthcare Index gained 0.52% to close at 16,654.32 points.